There are five key documents as
part of any syndication or fund.

And we're going to go through
what those five documents are,

what how they work, and why you
need them and how they fit into

the whole system.

My name is Tilden Moschetti. I
am a syndication attorney with

the Moschetti Syndication Law
Group. A lot of times when I

have people who are brand new
who have never done a

syndication or fund before, they
are confused as to what the

documents are that go into what
we're all putting together. How

do we build that security, when
we're looking at it from a

document kind of point of view,
there are five key documents

that take place before the form
d and notification to the, to

the states in order to build
that structure of what that

security looks like. So we're
gonna go through those, the very

first one is the articles of
formation or sometimes called

the Certificate of Formation.
This is typically filed with the

secretary of state for the state
where that entity is being

formed, you can think of it as
the birth certificate of the

entity. So for an LLC, it's
always the articles of

formation, Certificate of
Formation, something like that,

if it's a corporation, and
oftentimes, it's called the

Articles of Incorporation,
almost all of them are LLC. And

so we'll just use the LLC link
go here, it'll be simpler. So

the articles of formation or
Certificate of Formation filed

with the SEC or MA filed with
the secretary of state, it does

have several different things.
First, it lets the state know,

hey, we're forming this entity.
So it has a filing fee attached

to it basically sets that up, it
gives them the contact

information for it as well. So
hey, if you need to get a hold

of me state, this is where I am.
And this is how we're who's in

charge. It'll oftentimes have
what kind of business it can be

that most of the time, we can
get away with just saying any

legal purpose. So if we can do
that, we do it just because it's

nice and vague. And in what
you're setting up is for a legal

purpose anyway. And it's nice
and flexible for you. So a lot

of times that will be a part of
it as well. Another piece of it

that's also very important is
who is the registered agent or

the agent for service of
process. What that means is that

if somebody needs to file a
notice or serve notice upon

somebody, say they're starting a
lawsuit, they need to be able to

have, who that person is how to
actually give it well, the

articles of formation or
Certificate of Formation is

visible and is available for
view by the public. So they can

look at that entity, look at who
that registered agent is or the

agent for service of process,
and know who it is either as an

individual or an entity, so that
they can give formal notice to

them. So that is number one,
that is the Certificate of

Formation or articles of
formation. Number two is the

operating agreement. So the
operating agreement you can

think of as the rules for the
road. So it is the the rules

that the opera that the entity
that you formed with that

Certificate of Formation, that
birth certificate, it's the

rules that it must comply with.
So that's the operating

agreement. Now the operating
agreement is always extensive

and informed, and basically and
legalese. Because there's a lot

of things we're trying to do.
We're trying to make sure that

it's very clear what happens if
so the operating agreement

should be a document that if
there is ever a question about

what to do when blank, that
blank gets through, you know,

once you identify that blank,
you can go to the operating

agreement and find the actual
answer about what is supposed to

happen. We try to make that as
complete as possible, but as

flexible as possible to so that
way, whatever is in that blank,

there is an answer that is
provided for in the operating

agreement. For a typical
syndication or fun, these can be

50 to 70 pages long. So it's
very extensive and it covers a

lot of stuff. So everything from
who can be a member or what

happens if a member wants to go
out or allocations for taxes or

who they are. It's the who's the
manager and how can the manager

be paid to distributions and
compensation all of those things

or if there's problems, what do
we do? That's the opera The

agreement the rules for the road
of the entity. The third

document is the subscription
agreement. So the subscription

agreement is the document that
an investor signs that says,

hey, I want to be part of this
investment. It's that investor

saying, I'm gonna give you this
amount of money, and you're

gonna give me this amount of
interest in that LLC. And that I

want to be a part of, in
exchange for all that I, as an

investor, get to be a member of
that, of that company. So when

they, there are other things
that take place as part of that.

So there's this identification
of an exchange of money for

units in the LLC. But also we
have some warranties that are

being made that that the company
that the offering of the

security itself was compliant
with the rules to make sure

that's everything, everybody is
clear about what happened, that

the investor was given a private
placement memorandum, which

we'll talk about in just a
minute, things like that, that

all goes into a subscription
agreement. The fourth document

is the investor questionnaire.
Now, the investor questionnaire

actually technically isn't
required required in quotes, but

it is a darn good idea. So the
investor questionnaire serves

two purposes. First, especially
under Rule 506 B, what do you

have a non accredited investor,
the non accredited investor must

be sophisticated. So this
questionnaire helps us with that

sophistication part. There is a
survey, there's a couple

questions that establishes that
the investor is saying that

they're a a sophisticated
investor, that they know what

they're doing when they make
this investment, that helps the

syndicator or the fund manager,
because if there's ever a

problem, they can always present
that document that's that

basically outlines all a good
faith basis for establishing

that the investor is indeed a
sophisticated investor. The

second rule that the investor
questionnaire for is for is for

compliance and ease of use. So
what it does is it lets us, you

know, pay our taxes, lets us
file are make distributions,

because it has the investor, it
lists your investors name, you

know, if they're doing it under
an entity, it's got social

security numbers, it's got
information for the Know Your

Customer laws, like driver's
license number, things like

that. So that way, when it comes
tax time or distribution time,

you've got one easy place to
look where the document lives.

Now, the fifth one is the
private placement memorandum.

Now you can think of this as the
biggie the big kahuna and the

big dog. This is the document
that basically sets up all the

reasons that this is a
legitimate investment for

somebody to invest it. Now, it's
not the legal paperwork in terms

of the operating agreement or
the actual rules. But what it

is, is it's the required
disclosures and declarations

being made by the sponsor of the
security to the investor. So

part of it is the terms of the
offer. So the terms of the offer

is how distributions happen,
what's the membership price,

what are we investing into all
those things that take place in

it.

It also is doing other things
that are very important as well.

So it's making mandatory
disclosures, disclosures, like a

investor, you know that these
are risky, right? You know, that

you could lose all your money,
it's a fact you need to know it.

And it will also go through more
specific instances of what other

risks are inherent in the
investment. Because no matter

what, there are always inherent
risks in any investment. This,

the other part of it is, is it
makes a disclosure of any

conflicts of interest. Because
there are also always inherent

conflicts of interest, because
you've got a sponsor, who is

making money off of basically
having an investor take care

come into the investment, and so
that they can pay distributions

to that. So they're making money
off of that, but they're also

acting as a fiduciary at the
same time. So based on that

there's always a conflict of
interest. Now conflict of

interest are okay, but they need
to be disclosed and disclosed

and disclosed. So it's very
apparent what those conflicts of

interest are. So that way nobody
ever can say, hey, you never

told me that you were getting
paid a commission or you never

told me that you You're
investing in this property

yourself, or whatever it is,
those different conflicts of

interest. We're trying to make
sure that all the risks, all the

conflicts, everything gets told
to the investor. So ultimately,

they can make a determination
whether this investment is

suitable for their own purposes.
They're the ones at the end of

the day, making that
determination, and to make a

determination for suitability
for their own purposes. They

need all of the information. And
that is the point of the private

placement memorandum. Wow,
that's the five big documents

all that take place before the
forum D ID state notices. As you

can see, there's a lot of inner
workings that are going on. So

my name is Tilden Moschetti. I
am a syndication attorney with

the Moschetti Syndication Law
Grop. We help people put

together these documents, we put
them together for syndicators

and fund managers, because it's
part of the compliance it's part

of how you structure it. On top
of all these documents, we also

help our syndicators and fund
managers really do whatever is

needed in order to help them be
successful in their security

offering. Sometimes that's going
through materials like marketing

materials and helping them
identify what what sort of

disclaimers need to be there.
Whatever we can do to help make

our syndicators and fund
managers successful is in

everybody's best interest.
That's what we all want at the

end of the day. And that's why
that's why syndicators and fund

managers hire us, we're great at
that. We can help them make

decisions that are sound
rational, compliant with the

rules, but also based on the
best practices have somebody

who's actually done a lot of
deals for themselves, which is

me, and somebody who's also
overseen and given a lot of

interaction and advice about the
inner workings of the offerings

that my clients are making more
than just putting together the

legal documents. If we can help
you do the same thing. We'd love

to talk with you. Give me a
call, send me a message and

let's do that.